Responding to a challenge delivered by Gov. Sarah Palin in early December to get on with what they were charged to do, and a concern that problems in Canada — illustrated by difficulties with the Mackenzie gas pipeline — could indefinitely delay a pipeline from Alaska’s North Slope Lower 48 markets, the Alaska Natural Gas Development Authority is looking at a project to bring ANS gas to Alaska markets, and to Valdez for sale as LNG.
At its Jan. 29 board meeting, ANGDA adopted a proposal asking for $5 million for project definition work for the Alaska Gas Market System.
AGMS would take 1.25 billion cubic feet a day of ANS gas south, 0.25 bcf a day to in-state markets at the Yukon River, in Fairbanks and in Southcentral, and 1 bcf a day to Valdez for liquefied natural gas.
“The AGMS project proposal is intended to be advanced simultaneously with other efforts,” ANGDA Chief Executive Officer Harold Heinze said in a Jan. 29 memo to ANGDA board members. ANGDA would work cooperatively and non-exclusively with “all interested experienced parties” in a process which would lead to project definition and an open season, he said.
Heinze said AGMS would initially deliver 0.25 bcf per day of gas to Fairbanks and Cook Inlet. The project would then add a pipeline to serve a single-LNG train in Valdez for gas export and natural gas liquids separation at several locations, upping shipment on the line to 0.75 bcf. Compressors would then be added to serve a second LNG train and new petrochemical plants, for a total of 1.25 bcf per day.
The project is estimated to cost $5 billion to deliver gas to both tidewater locations and ($4 billion in pipelines and $1 billion for North Slope gas conditioning). LNG facilities would be built be the facility owners, Heinze said.
The total requirement in ANS gas sales commitments would be 10 trillion cubic feet, Heinze told the board, 3 tcf of which could come from state royalty natural gas at Prudhoe Bay. The commitment of gas from one of the three Prudhoe Bay owners would also be required, he said. Point Thomson gas is another possibility, he said, as is gas from explorers along the route of the pipeline.
Would this preclude a larger pipeline to Lower 48 markets?
Heinze said it would not, and that once a larger line was built, AGMS would continue to move gas for in-state markets, and also carry all the natural gas liquids.
The timetable is an estimated six years: project definition and open season work beginning in 2007; Regulatory Commission of Alaska proceedings, design and permitting beginning in 2008; financing in 2009; long-lead material and logistics setup beginning in 2009; right-of-way preparation and construction beginning in 2010; and startup in 2012-2013.
Editor’s note: See story in Feb. 4 issue of Petroleum News.